There are two methods of repaying your mortgage, referred to as repayment and interest only.
How do I want to repay the mortgage?
Repayment mortgages OR
Interest-Only mortgages: Endowment
Pension
ISA
Repayment Mortgages
Repayment mortgages require you to pay a sum of money each month to your lender which will consist of an interest payment on the mortgage for that month, (plus a share of the principal or mortgage amount) which you owe.
You make payments throughout the mortgage term (or mortgage period), paying the mortgage back in full by the end of the term. If you move home, however, some repayment mortgages will have to be cashed in with the proceeds from the sale of the old home. You then start again from scratch with a new mortgage.
You will be required to arrange a separate life insurance that will pay off your mortgage if you should die before the end of the mortgage term. This will also protect any dependants from this liability.
Repayment Mortgage Summary Pros: Easy to understand
Loan is guaranteed to be repaid in full Cons: Separate life assurance is required
May need to start over if you move home
